Target is fourth largest US coal firm; Aussie buy also on table.
After expressing interest in picking up some mines of Massey Energy, state-run Coal India (CIL) today said it was open to acquiring the US-based company in its entirety. Massey Energy is the fourth-largest coal company in the United States, with reserves of about 2.3 billion tonnes, while CIL is the world's largest coal miner.
"The US company, which offered some particular mines to us, is also offering the company itself. But we have to be cautious about the procedural part, as we are accountable to the public. We are interested, but wants the government to issue clear guidelines for this," said CIL Chairman Partha S Bhattacharyya.
Virginia-headquartered Massey, which has operations in West Virginia, Kentucky and Virginia, yesterday issued a statement stating that "its Board of Directors, as part of its annual review of the company's strategy, has directed the company to engage in a formal review of strategic alternatives to enhance shareholder value". Last month, the company said it was "exploring strategic opportunities", without specifically naming any company.
Regarding the government clearance, Bhattacharyya said, "We are expecting the government to issue guidelines soon, as it is aware of the problems faced by public sector undertakings. The Centre has already appointed a committee for this under the chairmanship of V Krishnamurthy. It will come out with certain guidelines soon."
According to him, if the guidelines come late, CIL, sitting on a cash reserve of Rs 39,000 crore, may take a conscious decision and go ahead with the plan of bidding for Massey. Earlier, CIL had appointed an investment banker and was conducting due diligence for a clutch of mines offered by the US company.
More From This Section
CIL had earlier said it had earmarked Rs 6,000 crore for acquisitions during this financial year. The company's record Rs 15,000-crore initial public offer last month was the largest ever in domestic bourses, and CIL is India's third-most valued company.
Evaluating $200-million Peabody buy
The Kolkata-based company is also in advanced stages of talks to buy a stake in Peabody's asset in Australia for about $200 million.
Peabody Energy Corp is the world's largest private sector coal company, and its Australian subsidiary — Peabody Energy Australia — has eight mines in Queensland and New South Wales, and active coal trading in all major Australian coal regions.
"Once the proposal is cleared by the management, we will put it in front of the board. The agreement includes buying stake at a particular mine of Peabody in Australia and also a long-term offtake agreement," Bhattacharyya said.
On the Indonesian joint venture that CIL was planning, he said talks were still going on and was at the initial stage to talk about. The technical evaluation of the Peabody assets was over, but due-diligence was continuing, Bhattacharyya said. He declined to divulge further details.